SAN DIEGO—It started with an invitation to the Broadway production of “The Lion King” in Tokyo for the Navy commander, his wife and their children.

In the end, the Malaysian defense contractor known in military circles as “Fat Leonard” would use prostitutes, plane tickets and other bribes to hook the U.S. Naval officer into a scheme that overbilled the Pentagon by millions, investigators say in court papers.

The accusations unfolding in a federal court case in San Diego signal serious national security breaches and corruption, setting off high-level meetings at the Pentagon with the threat that more people, including those of higher ranks, could be swept up as the investigation continues. A hearing Nov. 8 could set a trial date.

Misiewicz and Francis moved Navy vessels like chess pieces, diverting aircraft carriers, destroyers and other ships to Asian ports with lax oversight where Francis could inflate costs, the criminal complaint alleges. The firm overcharged the Navy millions for fuel, food and other services it provided, and invented tariffs by using phony port authorities, prosecutors say.

“It’s pretty big when you have one person who can dictate where ships are going to go and being influenced by a contractor,” said retired Rear Adm. Terry McKnight, who has no direct knowledge of the investigation. “A lot of people are saying, ‘How could this happen?'”

So far, authorities have arrested Misiewicz; Francis; the general manager of global government contracts for Francis’ company, Alex Wisidagama; and a senior Navy investigator, John Beliveau II.

Beliveau is accused of keeping Francis abreast of the probe and advising him on how to respond in exchange for such things as luxury trips and prostitution services. All have pleaded not guilty. Defense attorneys declined to comment.

Senior Navy officials said they believe more people likely will be implicated in the scheme, but it’s too early to tell how many or how high this will go in the naval ranks. Other unnamed Navy personnel are mentioned in court documents as getting gifts from Francis.

Francis is legendary in military circles in that part of the world, said McKnight, who does not know him personally. He is known for extravagance. His 70,000-square-foot bungalow in an upscale Singapore neighborhood has drawn spectators yearly since 2007 to its lavish, outdoor Christmas decorations, which The Straits Times described as rivaling the island city-state’s main shopping street with replicas of snowmen, lighted towering trees, and Chinese and Japanese ornaments.

“He’s a larger-than-life figure,” McKnight said. “You talk to any captain on any ship that has sailed in the Pacific and they will know exactly who he is.”

Navy spokesman Rear Adm. John Kirby said Navy Criminal Investigative Service agents initiated their probe in 2010. He declined to comment further, citing the ongoing investigation.

The same year, Misiewicz caught the world’s attention when he made an emotional return as a U.S. Naval commander to his native Cambodia, where he had been rescued as a child from the violence of the Khmer Rouge and adopted by an American woman. His homecoming was widely covered by international media.

Meanwhile, Francis was recruiting him for his scheme, according to court documents.

Misiewicz’s family went to a “Lion King production” in Tokyo with a company employee, and Misiewicz later was offered prostitution services, according to the criminal complaint. Within months, the Navy commander was providing Francis ship movement schedules for the USS George Washington Carrier Strike Group and other ships, the prosecution alleges.

Misiewicz would refer to Francis as “Big Brother” or “Big Bro” in emails from a personal account, while Francis would call him “Little Brother” or “Little Bro,” according to the complaint.

The company bilked the Navy out of $10 million in just one year in Thailand alone, U.S. Attorney Laura Duffy said.

In December 2011, the two exchanged emails about the schedule of the USS Blue Ridge, investigators say. According to court documents, Francis wrote Misiewicz: “Bro, Slide a Bali visit in after Jakarta, and Dili Timor after Bali.”

The complaint alleges Misiewicz followed through on the demands: In October 2012, the USS George Washington was scheduled to visit Singapore and instead was redirected by the Navy to Port Klang, Malaysia, one of Francis’ preferred ports where his company submitted fake contractor bids.

After Francis offered Misiewicz five tickets to a Lady Gaga concert in Thailand in 2012, Francis wrote: “Don’t chicken out bro we need u with us on the front lines,” according to court documents.

The federal government has suspended its contracts with Francis.

The defendants face up to five years in prison if convicted of conspiracy to commit bribery.

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